Australia’s largest coal project, Adani’s Carmichael mine, has again been given the green light by the federal government two months after it was stripped of its approval after a federal court challenge.

The $16.5bn mine and rail development, earmarked for the Galilee basin region of central Queensland, had its federal approval set aside in August after it emerged that Greg Hunt, the environment minister, had not considered its impact upon two vulnerable species, the yakka skink and the ornamental snake.

Hunt has reassessed the project and approved it for a second time, subject to “rigorous conditions” that would protect threatened species.

“The proponent is required to provide a groundwater management and monitoring plan, which must receive approval from myself before mining can commence,” Hunt said.

“The previous decision to approve the project was set aside at the request of the Australian government in August 2015 as a precautionary measure.”

Environmentalists have said the mine will endanger the Great Barrier Reef by increasing the amount of shipping through the ecosystem. The emissions from the burnt coal will also threaten the reef by accelerating ocean acidification and rising water temperature, which can lead to coral die-offs.

Hunt considered information from the Mackay Conservation Group, the Environmental Defenders Office and Australian Conservation Foundation before making the decision.

The Mackay Conservation Group initiated the federal court case that saw the approval overturned and has argued the mine would severely impact groundwater supplies and exacerbate climate change. The court case prompted the federal government to propose new laws aimed at curbing perceived “lawfare” by “vigilante” green groups.

Ellen Roberts, coordinator of the Mackay Conservation Group, said Hunt had failed the Australian people by ignoring the “devastating” impacts of the mine.

“Minister Hunt is sacrificing threatened species such as the black-throated finch and precious groundwater resources for the sake of a mine that simply does not stack up economically,” she said.

“Adjacent landholders are also rightly concerned about the impacts on their property from the billions of litres of water that will be taken from precious groundwater resources.”

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Among the 36 conditions placed on Adani is a commitment to “protect and improve” 31,000ha of habitat used by the southern black-throated finch. The site of the mine is one of the threatened finch’s last remaining holdouts.

This protection will be in the form of an offset, where habitat is found elsewhere and secured. A further 135ha and 5,600ha will be offset for the ornamental snake and yakka skink, respectively. Adani will have to pay $1m over 10 years towards threatened species in the Galilee basin.

Adani will also be required to implement all advice from the independent expert scientific committee on coal seam gas and large coalmining development and return 730 megalitres of water each year for five years to the Great Artesian basin to replace water used during mining.

Geoff Cousins, president of the Australian Conservation Foundation, said the approval of the mine is “grossly irresponsible” and indicated further legal challenges may follow.

“At a time when the world is desperately seeking cleaner energy options this huge new coal mine will make the effort to combat climate change all the more difficult,” he said.

“ACF will scrutinise this approval decision and carefully consider our options. We will use all appropriate means to stop this mine.”

Adani has welcomed the decision and said its mining project will bring “much needed economic benefits” to Queensland while protecting threatened species.

“Today’s announcement of the final federal approval for the Carmichael mine and north Galilee basin rail by minister Hunt makes clear that these concerns have been addressed, reflected in rigorous and painstaking conditions,” a company statement read.

“Adani has said for some time now that what is required for companies planning major job creating and infrastructure generating projects in Australia is certainty on approvals.

“It is certainty over the remaining approvals that is now key to the company progressing its plan to deliver mine, rail and port projects in Queensland that will deliver 10,000 direct and indirect jobs, and $22bn in taxes and royalties to be reinvested back into community services.”

The Carmichael mine, originally going to start production in 2017, is set to become the largest in Australia, extracting a maximum of 60m tonnes of a coal a year for export via a new rail line to an expanded Abbot Point port, near the town of Bowen.

Adani has welcomed the decision and said its mining project will bring “much needed economic benefits” to Queensland while protecting threatened species.

“Today’s announcement of the final federal approval for the Carmichael mine and north Galilee basin rail by Minister Hunt makes clear that these concerns have been addressed, reflected in rigorous and painstaking conditions,” a company statement read.

“Adani has said for some time now that what is required for companies planning major job creating and infrastructure generating projects in Australia is certainty on approvals.

“It is certainty over the remaining approvals that is now key to the company progressing its plan to deliver mine, rail and port projects in Queensland that will deliver 10,000 direct and indirect jobs, and $22bn in taxes and royalties to be reinvested back into community services.”

The Coalition and mining lobbyists have vigorously supported the benefits of the mine, despite an Adani contractor admitting in court that it would create far fewer than the 10,000 jobs purported by the government.

The project has been plagued by legal challenges and protests from environmentalists and Aboriginal representatives and complications around its financing. More than a dozen banks ruled out backing the development.

Michael Roche, chief executive of the Queensland Resources Council, said: “The exploitation of the technical legal loophole that caused the delay was merely a tactic used by green activists in an attempt to thwart efforts to develop the Galilee Basin.”